India’s largest lender State Bank of India has sent a ‘wilful default’ notice to Kingfisher Airlines (KFA) after attempts at recovering dues from the airline did not yield results. KFA owes a consortium of 14 banks, led by SBI, nearly R7,000 crore.

"We have sent a wilful default notice to Kingfisher Airlines and currently they are in the 60-day period where they can respond to the notice," Pratip Chaudhuri, chairman, SBI, told FE in an interview.

The company has 60 days to respond and convince the bank as to why it should not be labelled a wilful defaulter, after which the bank will take a final decision. If it’s categorised as a wilful defaulter, the bank will not lend to any company where Vijay Mallya is a promoter, Chaudhuri confirmed.

A detailed questionnaire sent to the company remained unanswered till the time of going to press.

While SBI has an exposure of about R1,600 crore, other lenders in the consortium include Punjab National Bank (R800 crore), IDBI Bank (R800 crore), Bank of India (R600 crore), Bank of Baroda (R550 crore) and United Bank of India (R 430 crore).

Earlier, in May, the lenders had served KFA with a Sarfaesi notice, after which the company was given a 60-day repayment period. However, due to its failure to repay, lenders have taken charge of the 25,850-sq ft Kingfisher House, which they are yet to auction.

The consortium of lenders has earned nearly R680 crore so far from the sale of pledged shares of United Spirits, Mangalore Chemicals & Fertilisers and KFA.

The defunct airline a reported a loss of R1,156.91 crore for the quarter ended June 30 as against a loss of R650.78 crore in the corresponding period last year.

Bankers are getting increasingly tough on erring promoters, issuing wilful defaulter notices to companies. Recently, Central Bank of India said it had issued a similar notice to Bombay Rayon and Deccan Chronicle Holdings.

In a recent address to the Parliamentary Consultative Committee, finance minister P Chidambaram had asserted that public sector banks should be strict with errant borrowers.